ANILKUMAR HARISHANKAR PANDEY,SURAT vs. INCOME TAX OFFICER, WARD - 2(3)(1), SURAT

The grounds of appeal

raised by the assessee are as follows: “1. The Ld Faceless CIET(A) has erred and was not justified on the facts of the case and in law in confirming the addition of Rs.28,40,330/- u/s 68 of the Act.

Succinctly, the factual panorama of the case is that assessee before us is an Individual. As per ITS data / AIR information, it was noted by the assessing officer that assessee had deposited cash of Rs.11,11,350/- in his saving bank account, maintained with State Bank of India, Apparel Park Branch, Sachin during the financial year 2009-10 relevant to assessment year (AY) 2010-11. From the ITD systems, it was noticed by assessing officer that assessee had not filed any return of income for AY 2010-11 and on the contrary, the assessee had deposited total cash of Rs.11,11,350/- in his bank account. As such income corresponding to cash deposits of Rs.11,11,350/- has been escaped assessment in the hands of assessee for the year under consideration within the meaning of provision of Section 147 of the Act. In view of the above, assessment for the A.Y. 2010-11 was re-opened, within the meaning of Section 147 of the Act, after recording the reasons for re-opening the case and taking prior approval from the higher authorities. Subsequently, notice u/s 148 of the Act, was issued on 28.03.2017, which was duly served to assessee. Subsequently, notices u/s 142(1) of the Act, dated 28.07.2017, issued upon assessee. In response thereto, assessee has not made any compliance / submission. Therefore, other show-cause notices u/s 142(1) of the Act, dated 06.10.2017 and 10.10.2017, respectively, were issued and served upon the assessee.

In response to these notices, the assessee did not file any reply before the assessing officer, Therefore, a letter u/s 133(6) of the Act, was issued to the State Bank of India on 14.08.0217 calling to furnish the bank statement of the account held by the assessee. As per the ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey bank statements furnished by the said bank, the assessing officer observed that, the assessee is holding two bank accounts viz: account No.30784249542 & account No. 30286682942, in which assessee has deposited total cash of Rs.11,11,350/- and Rs.12,36,050/- respectively on various dates. During assessment proceedings, it was noted by Assessing Officer that assessee has deposited total cash of Rs.11,11,350/- and Rs.12,56,050/- on various dates in his bank accounts. Further from the verification of ITS data/26AS details, it was observed by Assessing Officer that the assessee received an amount of Rs.4,35,134/- and Rs.37,800/- from Rapid Transport Corporation and Vinay Cargo Movies respectively on various dates on which TDS has also been deducted by them (deductors) but the assessee has not offered tax thereon by not filing the return of income for A.Y 2010-11.

Since the assessee did not furnish any information and details before the assessing officer, therefore, assessing officer proceeded to make the assessment under section 144 r.w.s. 147 of the Act. Considering the facts and circumstances of the case, the Assessing Officer noted that it is quite clear that the assessee has deposited the cash from his unaccounted income. In fact, it can be said that the assessee has introduced his unaccounted income in the form of so- called cash credits but after its detection, the assessee failed to establish the sources of the so-called cash credits/deposits. In view of the above discussion and facts, an amount of Rs.23,67,400/- deposited / credited in the aforesaid bank accounts was treated as unaccounted and unexplained income of the assessee and therefore assessing ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey officer made the addition at Rs.23,67,400/- (Rs.11,11,350 + Rs.12,56,050).

Further from the verification of ITS data/26AS, it was observed by the Assessing Officer that the assessee received an amount of Rs.4,3 5,134/- and Rs.37,800/- from Rapid Transport Corporation and Vinay Cargo Movies respectively, on various dates, on which TDS has also been deducted by the deductors but the assessee has not offered tax thereon by not filing the return of income for A.Y. 2010- 11.The Assessing Officer noted that during the entire assessment proceedings, the sufficient opportunities of being heard were given to the assessee, from time to time, but on the appointed date, neither assessee attended nor furnished any details and explanation in respect of the aforesaid receipt/income of Rs.4,35,134 and Rs.37,800/- received during the year under consideration. Therefore, the Assessing Office added the amount of Rs.4,72,934/- (4,35,134 + 37,800) u/s 68 of the Act.

Aggrieved by the above additions, so made by the assessing officer, the assessee carried the matter in appeal before the NFAC/ld. CIT(A), who has confirmed the addition made by Assessing Officer. The NFAC/Ld.CIT(A) has considered the assessment order and passed order on merit and confirmed the addition made by the Assessing Officer. Aggrieved by the order of NFAC/Ld.CIT(A) the assessee is in appeal before this Tribunal.

Shri Suresh K. Kabra, Learned Counsel for the assessee, pleaded that assessment was reopened based on the reasons that assessee has not filed his return of income; in fact, assessee has filed ITA.587/SRT/2023/AY.2010-11 Anilkumar H Pandey return of income. Since, the assessee could not attend the assessment proceedings, therefore, Assessing Officer made two additions, viz; Rs.23,67,400/- and Rs.4,72,934/-, respectively. The Ld. Counsel also pointed out that addition made by the Assessing Officer to the tune of Rs.4,72,934/- has already included in the total amount of Rs.23,67,400/-, hence effective addition is only to the tune of Rs. Rs.23,67,400/-. The Ld. Counsel also pointed out that assessee has already furnished his return of income and declared gross total income for the A.Y. 2010-11 to the tune of Rs.1,37,634/-, which is sufficient for the small assessee, considering the credit entries in the bank account to the tune of Rs.23,67,400/-, which comes to 5.81% in terms of gross profit ratio. The Ld. Counsel also pointed out that entire credit entries in the bank account should not be income of the assessee and only a percentage of these credit entries can be added in the hands of assessee.

The Ld. Counsel further submitted that additions so made by the Assessing Officer u/s 68 of the Act, is not sustainable in law. The addition u/s 68 of the Act can be sustained only when the assessee maintains his books of account. Since the assessee does not maintain books of accounts, therefore assessing officer cannot make addition under section 68 of the Act. Since the assessing officer made addition under wrong section, namely section 68, therefore entire addition should be deleted.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer. He pointed out that since the order passed by the Assessing Officer is ex parte,

I have gone through the above bank statements submitted by the assessee and noted that entire credit entries in the above bank statements, to the tune of Rs.23,67,400/-, cannot be income of the assessee. I also find that amount to the tune of Rs.4,72,934/- has already been included in the total amount of Rs.23,67,400/-, hence effective addition is only to the tune of Rs.23,67,400/-. I note that assessee has already filed his return of income and declared the gross total income at Rs.1,37,630/-. Since, assessee is a very small assessee and if @ 5% of the cash credit entries in the bank account to the tune

In the result, appeal filed by the assessee is allowed.